GOVERNMENT – LOCAL GOVERNMENT

Local government in New Zealand may be broadly defined as that element of the whole structure of government which is concerned essentially with the administration of affairs of peculiarly local significance. Each unit of local government, or local authority as it is usually termed, owes its origin, powers, and functions to some New Zealand statute. The right of local authorities to legislate for their own districts and to impose local taxation is exercised at delegation from the Central Government. Parliament is continually enacting legislation determining or varying the existence, powers, and functions of local authorities. Yet, notwithstanding their dependent relationship with Central Government, local authorities are entirely distinct legal entities, or corporations, and are by no means merely agents of the central authority. In effect they are one of the two complementary levels of administration which form the New Zealand system of government.

Major Types of Local Authorities in New Zealand

(excluding education authorities, licensing trusts, airport authorities, domain and public hall boards, and cemetery trusts)

Local authorities fall within two main categories: general-purpose territorial authorities and special-purpose, or ad hoc authorities. There are several types of territorial local authorities:

*Includes 178 where the board is a territorial local authority.

†Includes 36 where the board is a territorial local authority.

Counties

These are administrative units primarily intended for the administration of predominantly rural areas, although today, as a consequence of urban expansion, some counties include heavily urbanised areas. There is now no legislative authority for the establishment of new counties otherwise than by the merger of existing counties. Where an urban district under county council control contains at least 200 persons or 60 dwellings, with a density of at least one person to the acre or one dwelling to 3 acres, the county council may constitute the urban district as a county town.

County town committees, appointed by the parent county councils, act in an advisory capacity to their parent councils in respect of the towns concerned. There are at present 117 counties, of which 115 are controlled by county councils. The two remaining cover sparsely settled and relatively isolated areas in which the need for county government has not yet arisen.

Cities

The title of city is a courtesy or status title only, bestowed on boroughs having a population of at least 20,000. A city council has precisely the same powers and functions as a borough council.

Boroughs

Although some older boroughs are smaller, districts may not now be constituted as boroughs unless they have a population of at least 1,500 with a density of at least one person to the acre, concentrated in not more than 9 square miles in which no point shall be more than 6 miles distant from another. Boroughs and cities, of which there are at present 144, are urban units completely independent of the county structure.

Town Districts

Town districts may be either independent, that is, completely independent of county control and, in effect, miniature boroughs so far as the functions and powers of their town councils are concerned, or dependent, in which case they form part of and are subject to a limited degree of control by a county council. As no new dependent town districts may now be constituted this type of administrative unit is gradually disappearing. Independent town districts may not be formed unless they have a population of at least 500 with a density of at least one person to the acre, concentrated in not more than 2 square miles in which no point shall be more than 4 miles distant from another. At the present time there are 24 town districts.

Road Districts

There are three road districts, two in the Sounds County, which is not governed by a county council, and one on Waiheke Island. Their governing bodies are road boards which, as their name implies, are concerned with little more than district roading.

Special-purpose Authorities

Special-purpose authorities differ from territorial authorities in that each is charged with only one major function. The need for the most efficient and economic discharge of the major function being the prime consideration, their boundaries may either extend beyond or fall within those of territorial authorities in the same geographical area. Only rarely do the boundaries coincide. Sometimes, as is the case with a number of urban fire authorities, territorial authorities themselves are also constituted as and perform the functions of special-purpose authorities. The more numerous and important special-purpose authorities are those administering harbours (32 harbour boards), the retail distribution of electricity (43 electric power boards), and rabbit and opossum destruction (180 rabbit boards). Others are engaged in milk distribution, fire fighting, water supply, urban drainage and transport, soil conservation and rivers control, nassella tussock control, land drainage, and underground water usage. The Auckland harbour bridge and the Lyttelton road tunnel are also controlled by special-purpose authorities.

Franchise

Apart from a few special-purpose authorities some of whose members are appointed by other local authorities, by Government, or, in the case of fire authorities, by insurance interests, members of local authorities are elected triennially, any qualified elector being eligible to seek election. In general the franchise extends to all persons aged 21 years or over who either possess a rating qualification or who, being British subjects, possess a residential qualification in the district of the local authority concerned. The right to vote for members of land drainage and river boards is, however, restricted to those who possess rating qualifications. Plural voting on the basis of the value of rateable property is permitted in elections for county councils and several types of special-purpose authorities. Where rabbit boards rate on the basis of livestock or acreage, plural voting is also permitted.

Remuneration of Members

The remuneration of members of local authorities is governed by the statutes constituting the various types of local authorities. Most authorities may pay their chairman an annual allowance with a maximum fixed for each type of authority. County councils, for example, may pay up to £500 a year. The maximum payable to mayors and town council chairmen ranges from £500 to 1,500 according to the population of the municipality. Ordinary members of territorial authorities may be paid 30s. for each meeting attended, with a maximum of £78 in any financial year. All local authorities may reimburse members for expenses incurred whilst travelling on official business.

Historical Background

The first effective measures to set up any form of local government were taken after the provinces were established under the New Zealand Constitution Act of 1852 (U.K.) and made responsible for local government. The provincial councils adopted various approaches, with the result that, by 1867, 21 municipal local government units had been constituted under no fewer than 14 separate provincial ordinances. Some of these purported to vest municipalities with powers which, although undoubtedly necessary, were beyond the legislative jurisdiction of the provincial councils. The General Assembly rectified this state of affairs by the Municipal Corporations Act of 1867. In addition to regularising the position of the 21 municipalities already established, the Act served as a blueprint for the constitution of additional ones by the provincial councils. It provided that any such new boroughs should not exceed an area of 9 square miles which must contain not fewer than 250 householders.

The Municipal Corporations Act of 1867 succeeded in being passed because it regularised existing municipalities and contained no proposals for new taxation. Its projected rural counterpart was much more far reaching. It was proposed that it should repeal all provincial legislation establishing road and highway districts, provide a new system of counties and reconstituted road districts, and institute a uniform system of finance for them. This Bill was not passed by the General Assembly.

Upon the abolition of the provinces in 1876 the central legislature became wholly responsible for local government administration and the way was open for a uniform approach to the whole question. The Municipal Corporations Act of 1876 reconstituted 17 boroughs already constituted under the 1867 legislation and provided that 19 others, originally established under Otago provincial ordinances, be reconstituted upon petition of 50 ratepayers in each instance. The greatest changes, however, were made in rural local government. Three hundred and fourteen road boards or their equivalents originally established by the provinces were in existence, some ridiculously small. One Taranaki board had a total revenue of only £14 in 1875. The Counties Act of 1876 divided the country into 63 counties. While it did not abolish road boards, it clearly placed them in a subsidiary relationship to the counties, a relationship intended to lead to their gradual disappearance and the consolidation of rural local government in larger county units. This latter aim has been only partly successful. Although road boards have now practically disappeared, the number of counties had increased to 129 by 1929. Even today 115 controlled by county councils still remain. This fragmentation of the county structure was caused almost entirely by conditions applying to Government subsidies and loans. Maximum subsidy limits introduced in 1885 meant that the land area included in a given county would be eligible for a larger total amount by division into smaller counties, each of which could claim the maximum. The limitation of Government lending to individual counties, introduced in 1886, accelerated the trend to division.

The desire for some form of local authority suited to the needs of smaller settlements led to the enactment of a Town Districts Act in 1881. Town districts were limited to areas not constituted as boroughs, not exceeding 2 square miles, and containing not fewer than 50 householders. Their establishment led to some friction between town boards and county councils over the division of functions. Accordingly, in 1906, it was enacted that no town district with a population of more than 500 should form part of a county. Urban settlements arising in counties are now commonly first constituted as county towns.

The administration of certain local activities by special-purpose authorities has long been a feature of New Zealand local government. Their numbers are usually attributed to the multiplicity and consequent weakness of the territorial authorities. While this has undoubtedly been a major factor, especially since the turn of the century, the origin of some can be traced back to the days of provincial government, while others date from the inception of the present system of territorial local authorities.

Experiments with the control of harbours by specially constituted local authorities were carried out as early as the 1860s, and in 1870 a Harbour Boards Act empowered provincial superintendents to establish harbour boards. The year 1876 saw the first legislative provision for the supervision of rabbit destruction by boards of trustees and in the same year a Christchurch Urban Drainage Board was in existence. Even if the very numerous local authorities involved with education and with minor functions, such as the control of domains, cemeteries, public halls, and the like are excluded, the types and numbers of special-purpose authorities have steadily increased over the years until today there are more than 20 types totalling over 600 separate authorities.

Notwithstanding some small reduction in the number of territorial authorities in recent years, a reduction resulting mainly from the decrease in road boards and town councils, the total number of local authorities has increased steadily because of the greater number of special-purpose authorities. This is one reason why there have been two parliamentary inquiries since 1944 into the structure of local government generally.

Functions and Powers

Although local government has been broadly defined as that element of the governmental structure which deals with affairs of peculiarly local significance, there is no immutably fixed line of demarcation between its responsibilities and those of the Central Government. The allocation of functions between local and Central Government changes constantly as circumstances warrant. There is a wide range of powers and functions for which local authorities as a whole or as individual units may have varying degrees of responsibility. Traffic control, for example, may be undertaken by a local authority itself or by the State by arrangement with a local authority. Approval of land subdivision within municipalities has for many years been the responsibility of borough councils, but county councils were not given similar powers until 1962. On the other hand functions such as motor registration and hospital finance were at one time the responsibility of local authorities but are now that of the State.

A contributory cause of this state of flux is the fact that the territorial local authority structure is based on a system originally designed to meet the needs of the 1870s — a period when New Zealand consisted of many small and comparatively isolated settlements and resembled the present integrated community very little. Further, not only has the population more than quadrupled in this period but its distribution also has changed. In spite of minor adjustments made from time to time it is generally accepted that the territorial local government structure has not kept pace with these changes. Consequently, some local authorities have not the area or resources to carry out adequately functions involving works or other projects which require integration in national or regional schemes or the maintenance of a uniform approach and standard, at least without substantial assistance. This fact has direct relevance both to the extent to which powers can be delegated to local authorities and to the amount of financial assistance required to be provided by Central Government. Financial assistance to territorial local authorities by Central Government naturally involves some degree of supervision over the manner in which the finance provided is expended, and to that extent involves also Central Government control of local government actions.

The history of roading as a function of territorial local authorities is a relevant illustration. The responsibility for construction and maintenance of roads has traditionally been their responsibility. Indeed, roading is still a primary function of county councils and one of the more important functions of municipal councils. Since 1876 the power of initiative and the responsibility for roading finance have progressively and to a marked degree passed to Central Government, operating today through the National Roads Board. This Board, with its District Roads Councils, is representative of Government, local authorities, and road users. It has the sole ultimate responsibility for the construction, maintenance, and control of arterial routes, although it may delegate the actual work to local authorities and meet its cost. The Board also plays an influential part in the ordinary roading activities of local authorities through the payment of roading subsidies, which depend upon its prior approval of roading programmes.

Local Legislation

A local authority has no legislative powers beyond the authority to make bylaws within limits defined in its constituting Act, but it can promote legislation on matters which affect the government of the area under its jurisdiction and which it is not already empowered to deal with. If the subject is transient and not contentious and is approved by Government it is usually dealt with by the inclusion of an appropriate section in the annual Local Legislation Act passed by Parliament for this purpose. If, on the other hand, the local authority seeks powers of a permanent or major nature additional to those conferred on it by general Acts it must submit to Parliament a special local Bill. The extent to which the foregoing privileges are used may be gauged from the fact that the annual Local Legislation Act usually contains 40 to 45 sections, while about 15 local Acts are passed each year.

Finance

Rates on land and buildings provide the greater part of the revenue of territorial authorities and of many special-purpose authorities. Prior to 1896 there were only two systems of rating — rating on the capital value (the sum a vendor might expect to receive from the sale of his property on reasonable terms and conditions and free of mortgage) and rating on annual value (the rent at which a property would let from year to year after certain specified deductions are made). Rating on unimproved value (the sum a vendor might expect to receive from the sale of his property on reasonable terms and conditions, free of mortgage, and if no improvements had been made) was authorised in 1896. Since then there has been a slow but steady swing to this system, until today more than 80 per cent of the territorial authorities use it. Rates on the capital value and unimproved value are based on valuations made by the Government Valuation Department, while the annual value is usually determined by the local authority concerned. The maximum rates which may be levied for general expenditure and, to some extent, for specific works or services such as water supply or sanitation, are fixed by legislation. Special rates to meet loan charges are not fixed by statute but are effectively controlled by the supervision of borrowing exercised by the Local Authorities Loans Board. The one territorial authority without power to rate property is the Chatham Islands County Council which, because of its location and the economy of the islands, levies dues on imports and exports.

Some important types of special-purpose authorities can also rate, although they do not always do so. Some which can rate do not do so directly, but instead make a levy on territorial local authorities, which in turn are required to meet the levy out of rate revenue.

Government grants for various purposes also provide a substantial portion of local authority revenue, roading subsidies being the most important to territorial authorities. Although Crown property is, in general, traditionally exempt from the payment of rates, nevertheless the Government makes substantial ex gratia payments to local authorities in lieu of rates on its property. These payments are frequently the equivalent of the rates which would be levied on the property concerned if it were not owned by the Crown, and this is invariably the case with residential property fronting dedicated roads. Rate subsidies are available to rabbit boards, while fire authorities, catchment boards, and nassella tussock boards also receive substantial assistance. Other special-purpose authorities may also receive subsidies and grants for specific purposes. Hospital boards are unique in that, since 1957, the responsibility for providing their finance has been completely assumed by Central Government.

Other local authority revenue derives from the proceeds of trading undertakings, such as the sale of electricity, and from licence fees, fines, and other charges. Urban transport undertakings of local authorities have not, in general, been a source of profit in recent years.

Local authority borrowing has been controlled since the inception of the local government system in 1876 and the principles laid down in legislation at that time still apply. These, in general, require that loans shall be raised only for the construction of public works and utilities or to permit engagement in any undertaking (but not for normal maintenance expenditure), that all loan proposals be publicised, and that ratepayers be given the opportunity to vote on loan proposals. Such loans require the sanction of the Local Authorities Loans Board, a statutory body established in 1926 to ensure more effective control and authorisation of local authority borrowing. Within defined limits money may be borrowed in anticipation of revenue, usually by way of bank overdraft.

The volume, incidence, and nature of local government taxation, and the difficulties caused by the competition for capital among local authorities, have been controversial questions for many years. A Royal Commission investigated the whole problem of territorial local authority finance in 1958. Some of its recommendations have since been adopted, including the suggestion that portion of the national petrol tax be diverted to the National Roads Board for distribution to local authorities as roading subsidies. Its more radical recommendations, including the recommendation that a citizens' tax on earnings and profits be collected and distributed by Central Government, that Crown rating exemption be abolished, and that a local authority finance corporation be established, have not been implemented. The financial difficulties experienced by territorial local authorities are undoubtedly a contributing cause of the increasing interest in the structural reorganisation of local government.

Central Government Control

Central Government control of local authorities is effected in various ways through various governmental or parliamentary agencies. The Minister of Internal Affairs, through the Department of Internal Affairs, attends to the constitutional aspects of all territorial and many special-purpose local authorities, and he also administers legislation of general application, such as that governing local elections and polls, rating, local authority members' contracts, the public's rights of access to meetings, and so on. Further, he plays an important advisory role in the local legislation field, a topic which has already been mentioned. The Controller and Auditor-General is responsible directly to Parliament for the general financial audit of all local authorities. The control of borrowing and roading subsidies is exercised by the Local Authorities Loans Board and National Roads Board respectively, while the Department of Health, the Ministry of Works, and other Departments of State also have important control responsibilities in their different spheres. In all, in 1960, 21 Departments of State were concerned with territorial local authorities in the administration of more than 60 statutes. Twenty-two statutory boards, councils, and other bodies were likewise involved. Eleven Departments of State and 12 statutory boards are similarly associated with special-purpose authorities.

Of the various methods of control, that exercised in the financial field as a whole is probably the most influential. It is one of the most vital aspects of the relationship between local authorities and Central Government for, in addition to the close supervision of their financial affairs in general, local authorities are completely subject to Government in respect of the maximum local taxation leviable and State grants and subsidies payable. This is inherent in the New Zealand system of government, under which the Central Government is responsible through Parliament to the people for the overall supervision of all funds diverted from private to public use.